Keir Starmer is today facing a mounting crisis in the wake of his welfare humbling – just a year on from his landslide election win.
The PM’s authority has been left in tatters after his extraordinary surrender to avert defeat at the hands of Labour rebels.
Sir Keir effectively tore up his benefits reforms, which had been due to shave £5billion a year off spirallling costs by the end of the Parliament – but will now actually increase spending by £100million.
The move twists the knife on Chancellor Rachel Reeves, who was already struggling to fill a black hole in the public finances that could amount to tens of billions of pounds.
Touring broadcast studios this morning, Cabinet Office minister Pat McFadden warned there would be ‘financial consequences’ – hinting that the tax burden will need to rise again.
Ms Reeves has insisted Labour will stick to manifesto pledges of no hikes to income tax, employee National Insurance or VAT. But she refused to guarantee yesterday that the hated freeze in tax thresholds will not be extended.
Meanwhile, rebel ringleaders gloated that they had ‘power’ over the PM and stepped up demands for a lurch to the Left.
Rachael Maskell, whose fatal amendment sparked the benefits shambles, urged a £24billion ‘wealth tax’ to pay for more handouts.
Deputy PM Angela Rayner is said to have brokered the deal with rebels, fueling speculation that she is positioning to succeed Sir Keir. Opponents jibed it is obvious that Sir Keir will not now lead the party into the next election.
Keir Starmer’s authority has been left in tatters after his extraordinary surrender to avert defeat at the hands of Labour rebels
IFS researcher Tom Waters said that the Bill now implied an additional cost of £100million by 2029-30
Amid carnage at Westminster yesterday, the PM’s carefully assembled truce with rebels dramatically disintegrated.
Facing the threat of a massive revolt, Sir Keir opted to make yet another major concession just 90 minutes before the vote.
Ministers pledged that changes to disability handouts will not be finalised until after a review – meaning that the package as it stands will actually make the current system more expensive than before up to 2029.
Sir Keir – who is days away from marking the first anniversary of his election landslide – had already agreed that the benefits curbs would only apply to new claimants.
There was mocking laughter in the chamber as Social Security Minister Stephen Timms was asked how much the proposals would save now, and merely replied that the government would ‘set out figures in the usual way’.
Despite the humiliating manoeuvres, when the vote was held 44 Labour MPs still backed the fatal amendment and others abstained – although it was comfortably defeated by 328 to 149 as Tories largely stayed away.
Shortly afterwards, the Bill cleared second reading stage by 335 to 260, with the rebellion growing to 49. It will now be scrutinised at committee, where there could be further problems.
Rachael Maskell, whose fatal amendment sparked the benefits shambles, urged a £24billion ‘wealth tax’ to pay for more handouts
The concessions twist the knife on Chancellor Rachel Reeves, who was already struggling to fill a black hole in the public finances that could amount to tens of billions of pounds
Mr McFadden told BBC Breakfast he is ‘not going to speculate’ on what could be in the Autumn Budget but there would be ‘financial consequences’.
‘This is one moving part of the budgetary picture, it does have a financial consequence yesterday,’ he said.
‘I’m not going to speculate on where the budget lands, because there are so many other different moving parts in it, and it wouldn’t make sense for me to do that.’
Asked explicitly whether he could rule out tax rises, Mr McFadden said: ‘I’m not going to speculate on the budget.
‘We will keep to the tax promises that we made in our manifesto when we fought the election last year. But it doesn’t make sense for me to speculate on something where, as I say, there are so many moving parts of which this is only one element.’
Ms Maskell told BBC Radio 4’s Today programme that ‘we need to look at those with the broader shoulders’.
Welfare minister Stephen Timms prompted gasps from MPs as he announced the volte face last night
Despite the humiliating manoeuvres, when the vote was held 44 Labour MPs still backed the fatal amendment and others abstained
She said she was also ‘worried about public finances’.
‘And that’s why I think we heard very much in the debate, including from myself, that we need to look at those with the broader shoulders, as the Prime Minister said, contributing more into our system, but never pushing down on the poorest,’ she said.
‘And that was what the dynamic was yesterday, that we do need to look at things like a wealth tax, £24 billion, or equalisation of capital gains tax.’
